Nolan Church is the co-founder and CEO of Continuum. Before that, he was Chief People Officer at Carta and Head of Talent at DoorDash.
In an economic climate like this, layoffs are a necessary evil. But what most founders don’t realize is that you shouldn’t just optimize for efficiency – you should treat people with respect.
Layoffs are terrible, but they don’t have to destroy a company’s culture or reputation. When handled properly (as we did at Carta in 2020), layoffs can improve your reputation and morale. You have to optimize for humanity, not just for efficiency.
Here are 10 steps for carrying out humane layoffs:
Update your financial model
What is your current burn multiple? What do you expect topline earnings to look like? Make a conservative estimate and build in a buffer in case economic conditions deteriorate over the next six to nine months.
Find out how much runway you need. The delta between where you are and what you need is the amount you need to cut.
The more ownership the CEO takes of the situation, the faster the company will recover.
Limit your focus
This is not the time to spin multiple records. Focus your business on the one or two things that matter most and eliminate all non-essential projects.
Cut all non-staff costs
Yes, about 80% of a company’s budget is concentrated in its workforce. But before you start cutting staff, you should reduce your non-staff costs as much as possible. Which contracts can you kill? Where else do you have frivolous spending? Every dollar saved is a dollar that can be invested in your team.
And tuck in your top performers. Another thing Better got wrong was multiple layoffs (three in five months, to be exact). A layoff hurts; more than one round destroys a company’s morale.